I’ve had some comments from readers lately along the lines of:
- “Miles & points just aren’t worth it anymore”
- “Things have changed, why are you still bothering with loyalty programs?”
- “tRaVeL iS dEaD”
I wanted to share my take on this, and why I strongly disagree. Let me of course acknowledge that I have a vested interest here, since this also happens to be what I do for a living. 😉 However, I’ve been collecting miles & points for 15+ years, since long before I made a dime doing this. This isn’t just my job… it’s also my passion.
In no particular order, here’s why I’m not giving up on travel loyalty programs or credit cards:
In this post:
We’re going to want to travel again
It goes without saying that travel has changed a lot in recent months, and everyone has a different comfort level with getting on a plane, staying at a hotel, or even just leaving home. Some are already happy to travel, while others are (understandably) waiting.
There’s one thing I’m extremely confident about — just about everyone is going to want to travel again, and travel will make a full comeback… eventually.
Heck, I’m sure I’m not alone in saying that I have more of an appreciation for travel than ever before:
- I no longer take crossing borders or traveling worry-free for granted
- I think back oh-so-fondly on even mediocre trips that I’ve taken in the past
- If there’s one good thing to come from coronavirus, I hope it’s that we treasure the travel we can take even more in the future
What I’d give to go back to Tokyo right now…
Points have always been a long-term project for me
Some people collect points because they have a specific redemption in mind, and that’s great. However, for me collecting points has always been a long-term project.
That’s to say that I assign a specific value to each points currency, and I don’t redeem just because I have the points, but rather I redeem because the value proposition is there.
I do what I can to earn and redeem and to not get too big of a balance in any one program, though I’ve never gone wrong with having a points balance with one of the major transferable points currencies, like Amex Membership Rewards, Chase Ultimate Rewards, etc.
Over time individual loyalty programs have devalued, while others have increased in value — that’s the beauty of transferable points currencies, as you get so much flexibility.
Even if I don’t think I can redeem points imminently, personally I’m always happy racking up transferable points, especially if there’s limited opportunity cost.
I value Chase points just as much now as several years ago
We’re going to see more deals than devaluations
Of course there will be exceptions, but in general my expectation is that in the next couple of years we’re going to see more deals than devaluations from loyalty programs.
On the airline front:
- It will take years for business travel to recover, so premium cabin award seats should be more readily available
- Loyalty programs are ultimately a good way to fill seats on planes that would otherwise be empty
On the hotel front:
- Hotel loyalty programs have low reimbursement rates for hotels in situations where hotels aren’t full, so I expect to see lots of redemption promotions, as we’re seeing right now
- Promotions for earning points can really move the needle for filling hotel rooms, so I expect we’ll see lots of those as well
While some programs will counter the trend and devalue, I don’t think that’s going to be the overall theme from loyalty programs over the next couple of years. Just look at the promotions we’ve seen in the past few weeks — Southwest Companion Pass after one flight, Delta matching to Diamond Medallion status for the first time, Marriott Platinum status with a credit card welcome bonus, and much more.
I’m expecting we’ll see lots of empty premium cabin seats
Credit card issuers are offering flexibility
Cards earning flexible points offer quite a bit of flexibility to begin with, but that’s even more the case now than in the past.
For example, while historically the best use of Chase Ultimate Rewards points was for travel, at the moment points can also efficiently be redeemed towards everyday purchases using Chase’s “Pay Yourself Back” feature.
With the Chase Sapphire Reserve® Card (review) this means that you can redeem points for 1.5 cents each towards everyday expenses, including grocery stores, dining, and home improvement stores. That’s a lot of flexibility to have.
This gives you the best of all worlds — you can keep earning points at a great rate, you can save them towards future travel experiences, or you can cash them in now at a good rate towards everyday expenses.
For that matter, there are some credit cards where you can get the best of both worlds even under normal circumstances, and earn cash back or travel points. For example, the no annual fee Citi Double Cash® Card (review) offers 1% cash back when you make a purchase, and 1% cash back when you pay for that purchase (in the form of ThankYou points).
Best of all, if you have the card in conjunction with a card earning Citi ThankYou points, then rewards can be combined with other ThankYou points earning cards. That’s the kind of flexibility that’s more useful than ever before.
Some card issuers are letting you redeem points towards everyday expenses
Travel rewards cards offer better value for spending
Generally speaking, travel cards offer better bonus categories than cash back cards. For example, the American Express® Gold Card offers up to 4x points at restaurants and 4x points at U.S. supermarkets (on up to $25,000 in spend annually) and then 1x. I value that at a ~6.8% return. There’s not really a comparable cash-back card that offers such generous and well-rounded categories.
The way I view it, there is often an opportunity cost to using a cash back card rather than a points card, assuming you know what you’re doing.
Earning 4x points at restaurants is a great deal
Card issuers will keep adapting for the better
We’ve seen credit card issuers adapt their benefits to the new reality, and I expect we’ll continue to see this:
- The travel card space is a multi-billion dollar industry, and they’re not just going to close down shop because times have changed
- Not only are we seeing new benefits and temporary bonus categories introduced, but we’re seeing many card benefits extended, ranging from status to free night certificates
I expect we’ll continue to see this happen over time. After all, card issuers spend a lot of money acquiring customers, and the last thing they want is that people cancel their cards because they no longer find them to be valuable.
I expect more innovation from card issuers
We’re seeing some unprecedented offers
As I mentioned above, there’s no reason not to earn points right now if the opportunity cost is fairly limited. Some of the credit card welcome offers available right now are the perfect example of that, as this can be an easy to rack up rewards that you can redeem soon towards everyday expenses, or in the future towards a travel adventure.
Just to give an example of some of the value to be had, here are some of my favorite cards:
- 5x total points on travel purchased through Chase Travel
- 3x points on dining
- 2x points on travel purchases
- $95
- 4x points at restaurants
- 4x points at U.S. supermarkets, on up to $25,000 in purchases annually
- 3x points on flights booked directly with airlines or through amextravel.com
- $250
- Earn up to 26x at IHG Hotels
- Anniversary Free Night
- IHG Rewards Platinum Status
- $99
Those are just a few examples of some of the exceptional bonuses we’re seeing right now.
There are lots of incredible card welcome bonuses right now
Bottom line
I completely understand why some people aren’t particularly enthusiastic about loyalty programs and travel credit cards at the moment.
Personally, I’m taking the same approach that I’ve always taken:
- We’re all going to want to travel again, and we’re still going to want to travel as comfortably as we can, and get as good of a deal as possible
- Earning points is part of a long-term strategy, and you really can’t go wrong if you’re earning transferable points
- For the most part flexible points cards offer a better return on spending than non-travel cards
- Keep taking advantage of the great credit card bonuses and perks that are available with limited opportunity costs
How have you adjusted your strategy for earning miles & points as a result of the coronavirus pandemic?
Last 5 years I was able to accumulate a TON of miles/points from simply gaming sign up bonuses across a variety of banks like Chase/AMEX/Citi. That appears to be dead as dead can be. Tons of new rules placed by banks + devaluations every couple of months. Don't really see the point anymore.
So, I'll try to keep my existing balances from expiring, use them whenever covid lets up, but that may be the end of it unfortunately.
Had a great run!
~ The Honorable Reginald
I don't require much on interstate traveling, so simple Choice Hotels properties do have some half decent ones along the way. I noticed their points devaluation on redemption on gift cards, effective 10/1 that require 60 percent more points for a simple gift card compared to the month prior. Only time will tell on the trend continuation with this. I have taken advantage of the Chase increase in cash back, though
I had an amazing points trip planned and booked for my whole family of four to fly business class on Cathay and Singapore Air roundtrip from the west coast. That was supposed to happen at the end of July and obviously got cancelled. Now I’m sitting on all those unused miles/points and worrying about the upcoming devaluations in award programs. It’s not that it is a possibility for a carrier to suddenly change the value...
I had an amazing points trip planned and booked for my whole family of four to fly business class on Cathay and Singapore Air roundtrip from the west coast. That was supposed to happen at the end of July and obviously got cancelled. Now I’m sitting on all those unused miles/points and worrying about the upcoming devaluations in award programs. It’s not that it is a possibility for a carrier to suddenly change the value of miles/points - it is just a question of when. It also seems like it’s happening more often these days. Honestly the future of this hobby doesn’t seem too bright for me and going to cash back credit cards with no annual fees is looking like a better choice every time I hear about a devaluation or that award space is going to get even harder to book.
Here is the thing for me. No matter how the award redemptions change once this is over, I will travel. So, I keep collecting points in programs that I normally use (UR, MR, RR, IHG, Hilton). I will use them however I can, once I can. Maybe the flights will be fairly cheap and I will use UR to book through the portal. Maybe there will be some good transfer bonuses or discounted award flights...
Here is the thing for me. No matter how the award redemptions change once this is over, I will travel. So, I keep collecting points in programs that I normally use (UR, MR, RR, IHG, Hilton). I will use them however I can, once I can. Maybe the flights will be fairly cheap and I will use UR to book through the portal. Maybe there will be some good transfer bonuses or discounted award flights (like the Iberia deal a while back, which I also booked) or maybe I will have to spend a lot of points/miles but however it shakes out, we will be ready to travel and have points to cover that travel.
I’m still collecting points through usual spending. However, no more points from hotel spending since I’m not traveling. I don’t see myself traveling again until next Oct/Nov if a vaccine is available this spring for doctors and nurses. Like before, I think as long as my travel plan is flexible, I can find two J/F tix somewhat easily if I plan close to a year in advance. Sadly my spring trip to Kyoto looks like...
I’m still collecting points through usual spending. However, no more points from hotel spending since I’m not traveling. I don’t see myself traveling again until next Oct/Nov if a vaccine is available this spring for doctors and nurses. Like before, I think as long as my travel plan is flexible, I can find two J/F tix somewhat easily if I plan close to a year in advance. Sadly my spring trip to Kyoto looks like it’s not gonna happen. I’ve already cancelled multiple trips like everyone else. Hopefully we will find an effective cure soon for this virus or minimally bring the symptom down to having a cold level.
MattR - Agreed. I'm down to 0 premium cards, minus an Amex Green ($150 AF) that gives me LoungeBuddy credit if I really need it.
I can't imagine dropping $550 on a card - there's no way I'll get that much value out of them in the next 24 months.
The worst is Amex's timing on their premium cards. "We added a $40 credit until 12/31" Okay, I'll take that to the bank for another...
MattR - Agreed. I'm down to 0 premium cards, minus an Amex Green ($150 AF) that gives me LoungeBuddy credit if I really need it.
I can't imagine dropping $550 on a card - there's no way I'll get that much value out of them in the next 24 months.
The worst is Amex's timing on their premium cards. "We added a $40 credit until 12/31" Okay, I'll take that to the bank for another month, but clearly going to cancel the platinum soon. "We're eliminating the annual airline credit" while not introducing new features. Okay, the benefit was lame, but to take it away before introducing new features means a lot of cancellations are coming in the next 3 months...
One other thing that hasn't been mentioned is the impact on premium cards. The Platinum becomes much less attractive when terminals are half empty and Centurian lounges are offering pre-packaged means. Most will be better off saving the cash, adding mid-tier cards with solid bonus categories like the Amex Green or Citi Premier and pairing them with solid cash back cards (Flex, Double Cash, etc.). Travel perks carry much less value than they did 8 months ago.
@The nice Paul:
There will indeed be a paradigm shift and we will enter a hybrid model as communication technologies continue to advance. Two examples: a friend travels 9/12 months for pharma sales and hates his time on the road. With covid, they have been able to do a job no one thought possible without being in person. He sees himself 2-3 months on the road going forward.
I work in a company...
@The nice Paul:
There will indeed be a paradigm shift and we will enter a hybrid model as communication technologies continue to advance. Two examples: a friend travels 9/12 months for pharma sales and hates his time on the road. With covid, they have been able to do a job no one thought possible without being in person. He sees himself 2-3 months on the road going forward.
I work in a company where all transatlantic/transpacific/transcontinental flights are allowed in J. This is not happening going forward at the same level. Sure folks will travel to maintain relationships and sometimes more but no one loves being a road warrior - even in J - when you have a family and personal life at home. Business class travel for work - not pleasure - will see a reduction imo.
I'm a trained chef and have to ask, why are you hollowing out your carrots when you cut them? (referring to one fo your pics).
Just a quick observation based on the above:
Cash payments combined with points upgrades may become more important elements of our strategies moving forward. Airlines may not want to give away many 1st and biz class seats for miles, but cash plus some miles for an upgrade may be a profitable middle ground.
@Paul (the nice one) and @Eponymous Coward (and btw, where did you get that, at least to me, very strange handle):
IMO, you hit the nail on the head. It is not that the doom and gloom scenarios are likely to become 100 percent true. But this pandemic has all the makings of triggering a true paradigm shift. No one knows how extensive it will be but surely it is underway based on much of...
@Paul (the nice one) and @Eponymous Coward (and btw, where did you get that, at least to me, very strange handle):
IMO, you hit the nail on the head. It is not that the doom and gloom scenarios are likely to become 100 percent true. But this pandemic has all the makings of triggering a true paradigm shift. No one knows how extensive it will be but surely it is underway based on much of the anecdotal evidence provided by others here and from what I know in my business (Big 4 consulting, the kings of the 3/4/5 model--3 nights away, 4 days on client site, 5 wah or at the office). That model is dead as door nail at current and likely will be at least through YE '21.
My observation is flexibility is key and be prepared to have to lay out straight cash more often as the trends E.C. has noted spread through the industry. There will be no hard and fast, but likely, frequently, cash deals will best points deals more often. So having a stash of points is still okay but will not be a steady way to upscale on the cheap. Will there still be real deals? Sure, but likely more of the type that is much less desirable for those who need to plan at least a few months ahead and want to travel to desirable and safe destinations on an efficient routing during any time but the true off season. Right now, the second half of 2021 is especially tricky for airlines/hotels to manage inventory so there may temporarily be great deals but as we come out on the other side I think these will fade fast.
Of course, none of us have crystal balls. However, I do believe for those of us mere mortals without the millions of bucks some above seem to have, or the ability to generate millions of points on the fly through 6 figure spend, aspirational travel will be more challenging to secure w/o enduring the pain of having to layout at least some substantial hard cash.
Lucky, you mention that "travel cards" offer better spend category bonuses. Maybe that is changing. Look at the Chase Freedom/Freedom Flex changes, and the addition of PYB for the Sapphire cards. From a pure cashback standpoint, you earn 5% on cash travel bookings via a portal, 3% on dining, 1.5% back on everything else. This can be redeemed for pure cash. Many may find this attractive even in an environment when travel has returned (especially...
Lucky, you mention that "travel cards" offer better spend category bonuses. Maybe that is changing. Look at the Chase Freedom/Freedom Flex changes, and the addition of PYB for the Sapphire cards. From a pure cashback standpoint, you earn 5% on cash travel bookings via a portal, 3% on dining, 1.5% back on everything else. This can be redeemed for pure cash. Many may find this attractive even in an environment when travel has returned (especially if people are doing more domestic travel). Amex Gold points also can be converted to cash via an Amex Platinum. Who is to say that Amex won't release a "Amex Cash Platinum" card that offers the same travel benefits as an Amex Platinum, but earns something lik 5% cash back on travel and 3% cash back on dining/groceries? Maybe issuers like Capital One will enhance their travel eraser products...
It will take many, many years for business travel to fully return, if at all ( or at least to pre 2020 levels). This will likely have a major knock-on effect on leisure travel: can we expect the same level of discounted fares in the future, given both the impact of social distancing requirements and also the likelihood of fewer business travelers effectively subsidising Y class seats? We may well see some heavy discounting in...
It will take many, many years for business travel to fully return, if at all ( or at least to pre 2020 levels). This will likely have a major knock-on effect on leisure travel: can we expect the same level of discounted fares in the future, given both the impact of social distancing requirements and also the likelihood of fewer business travelers effectively subsidising Y class seats? We may well see some heavy discounting in the early stages of the recovery, but longer term there will be upward pressure on leisure sector fares.
It is to be hoped that the incoming administration will have both the numbers and the fortitude to take on the criminal cartels running the banking and finance sector , hopefully eliminating most of the excesses of the points ‘industry’. The sleaze is palpable. It’s long overdue.
I continue to look for opportunities but I’m staining away from programs where points expire and there’s no way to extend them indefinitely (Singapore Airlines). At one point I transferred a hefty amount of Ultimate reward points to this program for a United international trip but the reward was gone before the points hit my account. Hopefully I will get to redeem them before they expire, but with that said, I won’t ever do that...
I continue to look for opportunities but I’m staining away from programs where points expire and there’s no way to extend them indefinitely (Singapore Airlines). At one point I transferred a hefty amount of Ultimate reward points to this program for a United international trip but the reward was gone before the points hit my account. Hopefully I will get to redeem them before they expire, but with that said, I won’t ever do that again. Would rather know my points are safe for the long term.
Travel is a deeply personal passion for many of us that can be paused but never extinguished. Ramp up smart COVID-19 quick detection, encourage consumer confidence to travel again in the belief that the cost of closing borders far outweighs opening them, and that people will ultimately make wise decisions in order to protect their own interests ✈️
I'm more and more starting to realize that this points hobby is much more suited to single people or couples. With school aged kids, I'm basically forced to book travel during peak seasons where, with dynamic award pricing, there aren't great deals. The 1.5 cpp proposition with the CSR is great in this regard since I'm "guaranteed" a floor price. But transferable points aren't such a great value prop otherwise for people like me.
...I'm more and more starting to realize that this points hobby is much more suited to single people or couples. With school aged kids, I'm basically forced to book travel during peak seasons where, with dynamic award pricing, there aren't great deals. The 1.5 cpp proposition with the CSR is great in this regard since I'm "guaranteed" a floor price. But transferable points aren't such a great value prop otherwise for people like me.
Lucky, I'm curious to see the day when you have two young kids and you try to maintain this lifestyle. I don't mean that sarcastically either. I don't read much about these sorts of family redemption stories, even on TPG's website.
So I have been trying to book Melbourne to Santiago for this time next year. On the day the tickets go on sale, tickets are >500k each way. No at all good value. I will continue to hoard points though.
In exciting news we in Melbourne can now go 25km!
Going long on a deflationary currency is not necessarily a sound investment strategy, but agree there will be deals for those willing and able to travel before the rest of the world is.
"On the hotel front:
Hotel loyalty programs have low reimbursement rates for hotels in situations where hotels aren’t full, so I expect to see lots of redemption promotions, as we’re seeing right now"
Will someone please explain this to the crooks@ Marriott
A Ritz Carlton property in Honolulu last year was 50,000 points a night now 100,000 a night for the lowest standard room.As a lifetime Titanium no breakfast
I booked a...
"On the hotel front:
Hotel loyalty programs have low reimbursement rates for hotels in situations where hotels aren’t full, so I expect to see lots of redemption promotions, as we’re seeing right now"
Will someone please explain this to the crooks@ Marriott
A Ritz Carlton property in Honolulu last year was 50,000 points a night now 100,000 a night for the lowest standard room.As a lifetime Titanium no breakfast
I booked a huge VIP suite for less than half of that at another brand nearby.
Just say no.Granted other programs have done a great job offering lower priced rewards IHG ,Hyatt.Marriott and Hilton not!
@Allen +1
My employer is an international organisation based in Europe. My job involved a monthly foreign trip, 3/4 of which were intercontinental; and roughly 50 or 60 hotel nights a year. My employer paid for J class travel. Normally anything from 6 to 25 of us would meet — all that travel cost, plus hotel nights and meeting rooms (and restaurant bills).
My last trip was early March, to Buenos Aires. All trips after...
@Allen +1
My employer is an international organisation based in Europe. My job involved a monthly foreign trip, 3/4 of which were intercontinental; and roughly 50 or 60 hotel nights a year. My employer paid for J class travel. Normally anything from 6 to 25 of us would meet — all that travel cost, plus hotel nights and meeting rooms (and restaurant bills).
My last trip was early March, to Buenos Aires. All trips after that were cancelled (and, since most international borders are closed, we couldn’t have done most of it even if we’d wanted).
We’re now assuming certainly no travel for the rest of this year, and definitely none for the first 1/4 of 2021; and, frankly, there’s not much likelihood of any until late 2021 at the earliest.
In the great scheme of things my employer is small. But everyone in my world is doing the same: all flights and hotel nights cancelled. For the foreseeable future.
@RobinWeber thinks everything will go back to how it was before, because it always has. I think that’s an unproven assertion based on a false “fact”. There have been huge historical shifts caused by contagious disease (maybe the absolute biggest was the end of the entire economic system of Feudalism after the European Black Death?).
We’re already seeing airlines making decisions which will have long-term impacts (eg, most are permanently removing the largest-capacity planes from their fleets; planes offering 1st class are much more likely to be scrapped than those that don’t).
Disease spread is most likely at large-scale gatherings (Uruguay had no COVID until one rich old woman flew from Italy to Montevideo for a society wedding: 300 infections...). So the big conventions market must be under significant threat: thousands of lawyers or doctors or whatever, all flying to one huge indoor hall and deliberately mingling together? If you asked someone to design an optimal disease transmission mechanism, that might be it.
In the meantime, those annual conventions will have been held using Zoom or other platforms. They are not the same, but they’re not a bad substitute. And, like much of life, there’s a cost/ benefit calculation to be done: is the *vast* amount of extra cost involved in travel and hotels offset by greater value from being there in person? Sometimes it will be, but sometimes it won’t. And now we have been forced to experience the screen-based alternatives, a significant number of people may continue to choose those. Even if we move to hybrid in-person/Zoom conventions, that’s a reduction of X% in total travel costs. I wouldn’t want to be boss of a convention centre right now.
Most people entered this situation with the “it’ll all be over by Christmas” mentality. It turns out that that’s not the case. And the longer it goes on, the more permanent changes will take place making a return to the former life pretty much impossible.
There will not be a return to normal, but a New Normal.
Hm, who knows. Collecting miles and points as you go can’t hurt, but creating spend specifically for collecting them is like buying a lottery ticket now. There is no telling what you will eventually get for it, if any.
I think for most people they should take advantage of perks for different types of charges and charging certain types of activities to certain cards to get the most value.
But every time there is a promotion for purchasing points, for most people, I think is unnecessary at this time. We need to be mindful that most of the hotel and airline points are devaluing. Credit card points tend to devalue less often and are...
I think for most people they should take advantage of perks for different types of charges and charging certain types of activities to certain cards to get the most value.
But every time there is a promotion for purchasing points, for most people, I think is unnecessary at this time. We need to be mindful that most of the hotel and airline points are devaluing. Credit card points tend to devalue less often and are much more flexible.
This is different than if this is your full time career in that you are paid by companies to promote their products and to experience their offerings. In that case you do not really care because you will use the points anyway.
@Andrew - "Amex has the most transfer partners (and the best IMO). They give me the most flexibility for international business and first class trips."
And there's the rub, right? "The most flexibility" means very different things to most people. Flexible to you means "being able to get business/first class tickets anywhere I want to go using miles" whereas flexibility to a lot of people means "most value to travel whenever/wherever I choose." There's value...
@Andrew - "Amex has the most transfer partners (and the best IMO). They give me the most flexibility for international business and first class trips."
And there's the rub, right? "The most flexibility" means very different things to most people. Flexible to you means "being able to get business/first class tickets anywhere I want to go using miles" whereas flexibility to a lot of people means "most value to travel whenever/wherever I choose." There's value in both, and I think this is really where the Chase/Amex divide is going to be drawn. Casual travelers/spenders are over to Chase, power users over to Amex. That's the way I see it, anyway.
I bet Amex is thinking they can get a lot of high-dollar spend from a narrow set of people whereas Chase believes they can get median spend but make up the loss in volume. We'll see who's right!
Well, kudos to all the opinions above. Most are extremely well written.
We have mile/points with several different airlines. And we have certainly enjoyed the benefits mainly through upgrades.
But the best is our credit card (Scotiabank) which pays us 4% on travel purchases.
We have booked upcoming trips to Mexico, Azores and Ireland and hopefully we will be able to complete these in spite of what is going on in the world right now....
Well, kudos to all the opinions above. Most are extremely well written.
We have mile/points with several different airlines. And we have certainly enjoyed the benefits mainly through upgrades.
But the best is our credit card (Scotiabank) which pays us 4% on travel purchases.
We have booked upcoming trips to Mexico, Azores and Ireland and hopefully we will be able to complete these in spite of what is going on in the world right now.
I do appreciate the candor of most of your followers.
Points and miles will remain and smart companies will leverage loyalty programs during the rebound. It's certainly going to look different, though. My guess is hotel loyalty programs become more prominent, as they've always been more accessible to the leisure traveler. Airline loyalty programs will need to adjust, which likely means dynamic pricing becomes even more prevalent.
Points enthusiasts will also need to adjust expectations/valuations as obscene first class redemptions will likely cease to...
Points and miles will remain and smart companies will leverage loyalty programs during the rebound. It's certainly going to look different, though. My guess is hotel loyalty programs become more prominent, as they've always been more accessible to the leisure traveler. Airline loyalty programs will need to adjust, which likely means dynamic pricing becomes even more prevalent.
Points enthusiasts will also need to adjust expectations/valuations as obscene first class redemptions will likely cease to exist. This appears to be the end of first class, and likely the race to update business class cabins as well. I'd expect an expansion of Premium Economy as airlines cater to leisure travel. There will be opportunities for savvy travelers over the next few years, but we'll all have to adjust our expectations.
I'm moving away from Chase with the devalue of United and the prior loss of Korean Air. Amex has the most transfer partners (and the best IMO). They give me the most flexibility for international business and first class trips. I've found a ton of business and first class tickets for 2021 for two people. I might not be able to go on all the trips, but right now it's easy to accumulate points and...
I'm moving away from Chase with the devalue of United and the prior loss of Korean Air. Amex has the most transfer partners (and the best IMO). They give me the most flexibility for international business and first class trips. I've found a ton of business and first class tickets for 2021 for two people. I might not be able to go on all the trips, but right now it's easy to accumulate points and book amazing trips as long as you have flexibility with your travel. Hopefully the countries will open up. I've got Maldives scheduled for November and everything is looking good so far.
Lucky - I too believe that travel will be back, but I'm a little more gloomy about the miles side of the game.
I have to agree with Allen. There's a point at which I'm looking at a stack of miles that I don't really use because redemption values have gone all over the place. And it's not just dynamic pricing but the surcharges and fees that suck all the value out of once great...
Lucky - I too believe that travel will be back, but I'm a little more gloomy about the miles side of the game.
I have to agree with Allen. There's a point at which I'm looking at a stack of miles that I don't really use because redemption values have gone all over the place. And it's not just dynamic pricing but the surcharges and fees that suck all the value out of once great awards.
Sure, I can jump through hoops to arbitrage a partner booking. But that too comes at a cost that I don't think is adequately reflected in most reviewers' valuations of points and miles. At this point, my bet is on the Chase ecosystem providing the most consistent and easy-to-use value, which at this point comes with a premium. So cash back and points with a redemption floor (e.g. the Sapphire suite) become a much better value proposition at this point in time.
@Jake: When in doubt, check eBay. (checks) Yup, not just the whips, but whole buggies as well. (Horses extra.)
@Alex Z: Why chase miles & points if you have millions? Because then you don't touch the principal.
Even before Covid, I was accumulating points/miles far faster than I could even earn them. Because of the surplus, I was buying flights and renting rooms for friends and family members at a fast clip just to use up some points. Now that I've been grounded for 3/4 of a year, the points continue to accumulate with no use in sight. At some point, one has to say enough is enough. I have enough points...
Even before Covid, I was accumulating points/miles far faster than I could even earn them. Because of the surplus, I was buying flights and renting rooms for friends and family members at a fast clip just to use up some points. Now that I've been grounded for 3/4 of a year, the points continue to accumulate with no use in sight. At some point, one has to say enough is enough. I have enough points to last at least 5 years, if not 10. But even if I needed a flight or room right now, rates are often so cheap that it would be a historically poor redemption value to use miles. So I am gradually cancelling all my points cards and moving toward simple cash back, which I can at least benefit from now--not 10 years from now.
I used to fly internationally for business around once every 6 weeks, but I don't expect any international business trips for at least another year, and even after that, my travel will never return to the same level. Zoom, Skype, etc. is so much easier, cheaper, and more convenient than having to spend thousands of dollars to deal with all the inconveniences of travel, only to arrive at meetings jetlagged and exhausted. (Not to mention the environmental impact of all those flights, which companies will undoubtedly be more focused on in the next 10 years.)
Most of my big-ticket personal travel was an addendum to a business trip. (E.g., if I have to be in Europe or Asia for business anyway, take a week of vacation afterwards somewhere else in the region.) But since the business trips will be permanently curtailed, so too will those personal trips. I expect many more vacations within the US from now on because many of those international "addendum" trips are not ones that I would have made a special effort to book as standalone trips; they happened only because I was already on a different continent so why not.
Beyond the miles/points, many of the credit cards themselves are now (perhaps permanently) devalued in effect. For example, I had the AmEx Aspire mainly for lounge access and upgrades at Asian (especially) and European hotels. But if I won't be in either place until maybe late 2021 or early 2022, and even then at maybe 30% the frequency as before, the value of the access those cards provided is greatly reduced. Similarly, I had the AA Executive card primarily for Admirals lounge access on those 6-8 hour layovers at Heathrow, but if I'm only going to do that 1 or 2 times a year at most, it's no longer worth $450. Next on the chopping block is the AmEx Platinum, which I mainly got for the 5x on flights and the Centurion access at my home airport. I've used neither benefit a single time since February and will certainly use far less in the future. The AmEx Gold and Green will also be cut from my wallet by the end of the year because they are meant for accumulating points that have no "Pay Yourself Back" equivalent and otherwise will just lead to a larger stash of points that I won't use for years.
Even the mid-tier hotel cards are becoming less valuable because you can only accumulate so many free-night certificates at a variety of hotels brands when you have no major trips planned. I got cancelled/downgraded all of my mid-tier Marriott, Hyatt, and IHG cards, keeping only the $49 IHG card.
All that to say that I doubt I am an anomaly. I am likely representative of many similar business (and "addendum" leisure) travelers that already have an excess of points and now anticipate fewer long-term opportunities to use them, along with a wallet full of high-fee cards that no longer have a good cost/benefit ratio. For the sake of simplicity, I'll take the 2% cash for now and maybe keep one well-rounded premium card such as CSR. Maybe by 2030, I'll come back to the mountain of premium cards, and by that time, I'll probably be ripe for a lot of sign-up bonuses (if such a thing even exists by then).
There must still be people who collect buggy whips out there.
Here's the counter to this, Lucky:
- It's very clear that trends in the industry are moving towards dynamic point values, with American, Delta, Alaska, IHG, Hilton, Marriott ALL having moved in this direction in the recent past. Dynamic point values mean that sure, you can get that business class seat to Frankfurt in February or that Marriott at the Messe in low season, but good luck getting to the Maldives and staying at that...
Here's the counter to this, Lucky:
- It's very clear that trends in the industry are moving towards dynamic point values, with American, Delta, Alaska, IHG, Hilton, Marriott ALL having moved in this direction in the recent past. Dynamic point values mean that sure, you can get that business class seat to Frankfurt in February or that Marriott at the Messe in low season, but good luck getting to the Maldives and staying at that large chain five star resort during peak season without a LOT of points (or cash... which you seem to be doing, good to be in that income level where cash at an Aman or a four digit business class fare paid in cash makes sense, huh?)...
The closer we come to award prices mirroring cash prices the less of an argument you have for preferring miles or points to cash because the "I got 10 cents a mile for this ticket or room!" factor goes away. The "hobby" as a lot of people play it is based on arbitraging those rooms at the Park Hyatt Maldives or Etihad Apartments seats for pennies on the dollar.
- So if the pandemic is the trigger for a lot of the corporate world to realize "huh, you know, we were spending a lot of shareholder money to do travel that it turns out isn't strictly necessary, oh, and by the way, it's going to help melt the polar ice caps if we start up at previous levels again"... that's a lot of premium inventory that will get sucked out of the industry pretty fast because airlines will adjust to a new reality. We can already hear that giant sucking sound as Etihad, Qantas, British Airways, Air France, Lufthansa, Singapore Air all bench their A380s and 744s and everyone starts flying fuel-sipping A350s and 787s. Premium cabin inventory for awards depends on there being empty seats when corporations aren't flying people, and corporations paying inflated prices when they do. Once that money goes away the seat mix is going to change, and it won't be in favor of having first class and huge business class dorms on planes.
Think about it... coach prices go up because supply for longhaul travel goes down, and awards for coach and premium economy may actually make sense. Horror! I can't imagine you in a Lufthansa coach seat... ;)
- On a related note, reduced corporate travel over the long term means a WHOLE LOT of hotels that depend on conventions and business traffic suddenly don't make money or economic sense (their F/B is impacted by losing money over coronavirus too). Whoosh, more sucking sound as that real estate isn't going to stay empty for long, but it gets converted to something else. Oh, and AirBnB is out there stealthily picking off leisure travelers. Plus if you don't have as many corporate "I spent 300 days on the road" warriors out there... who outside of bloggers or maybe digital nomads who don't like AirBnBs will be populating the upper levels of status for hotels? As such I see some pretty strong incentives pushing towards more points chasing less aspirational inventory.
All this isn't to say you're exactly wrong, but there are some trends moving through the industry that I think move towards less corporate travel indirectly subsidizing leisure travel, which is a lot of what loyalty programs are about- the corporate travel warrior straight out of Up In The Air's six digits of flights on American and 50 nights at Hyatt Places and Hyatt Regencies grinding through conferences and customer visits, all of which turn into a week at the Park Hyatt Maldives plus Etihad Apartments. We may be moving to more of a "you get what you actually pay for" world in travel- where you might want to just grind through cashback card bonuses to save up for aspirational travel...
Lucky,
Very, very well said, and I couldn't agree more with all of the points you made!
It seems it's very difficult for many to maintain any sort of perspective, and I wish people would study history a little bit more.
In 1918, would you have stated that in a hundred years, we'd still be grappling with the so-called Spanish Flu? If it were 1942, would you have insisted the war would last forever? In...
Lucky,
Very, very well said, and I couldn't agree more with all of the points you made!
It seems it's very difficult for many to maintain any sort of perspective, and I wish people would study history a little bit more.
In 1918, would you have stated that in a hundred years, we'd still be grappling with the so-called Spanish Flu? If it were 1942, would you have insisted the war would last forever? In the 1950's, would you have bet on eternal warfare in Korea? Would you have said the Berlin wall would stand forever? What about after September 11? Were you among those who - bizarrely - claimed that air travel would never return?
Crises, even worldwide ones, are temporary, and despite what many of you naysayers insist on, the crisis brought on by COVID will go away, too, and things WILL be back to normal within 1-2 years.
Maintain. Some. Darn. Perspective. And STOP with the eternal pessimism, you are displaying a woeful lack of intelligence in the process.
Business travel will be back but not in the same quantity so airlines will either repurpose aircraft or cut their fleet or lower fares. In the short-term there should be deals and miles are not going to be of 'value' when it might be better to just buy cheap J fares.
I also have the Citi DC now and cash back is a diversification strategy just like UR, MR, TY.
For those that don't have...
Business travel will be back but not in the same quantity so airlines will either repurpose aircraft or cut their fleet or lower fares. In the short-term there should be deals and miles are not going to be of 'value' when it might be better to just buy cheap J fares.
I also have the Citi DC now and cash back is a diversification strategy just like UR, MR, TY.
For those that don't have the flexibility of flying on a Wed morning - the miles game is clearly becoming more difficult.
@ Hal - like Alonzo said if you have a few million and you put that money in Bask Bank for AA miles rather than invest it in stocks or mutual fund you are a moron! This money if true had to be inherited because no person that earned that money would put it in Bask Bank. Also, why would you chase points and miles if you have millions?
Mark S
Wow SW $420 rt MDW>HNL one stop in Jan . I saw my MDW>BNA $$ Double in ONE WEEK HaHa !! So Flip the cards as ALWAYs get ur best deal IF it b CASH do it . All my points are keepers but Singapore LIKE 2.5 YEARS TILL dead..
As u know a long term game Sir .
cheerS
@Hal if you have a few million in a Bask account, you're a moron.
I'm in a hold pattern. Definitely not chasing or purchasing miles. Holding on to what I have and making sure they don't expire.
Agree completely Ben - first of all unless you need to switch to cash back cards what’s the issue? I run $150,000+ in spend through cards each year, am retired so can travel whenever I want (if it is late 2021 or 2022 no big deal) and I also get value from hotel awards now w domestic travel (more car than plane). Also I am financially set so switching to a cash back card doesn’t...
Agree completely Ben - first of all unless you need to switch to cash back cards what’s the issue? I run $150,000+ in spend through cards each year, am retired so can travel whenever I want (if it is late 2021 or 2022 no big deal) and I also get value from hotel awards now w domestic travel (more car than plane). Also I am financially set so switching to a cash back card doesn’t make any sense to me when I can ultimately get more value from travel awards and cash flow isn’t the issue.
As for devaluations, I agree you will see many more deals (already into mid 2021) and no program an afford to run off people by a drastic devaluation until at least 2022. For the person can called the Delta status match a devaluation that is targeted and limited in duration so won’t impact most people until business travel comes back. I’m lifetime elite on both DL and AA and gave up on the assumption I’d get upgraded years ago. If I want the front cabin I use my miles or simply buy it. Again I’m done w the slog of business travel and have the means to buy what I want.
I finally got my first cash back credit card this year, the Fidelity 2% visa. I would rather have the cash in my pocket rather than more miles that I may or may not use. Basically I use my miles for saver awards on international travel. I am curious what that will look like when international travel gets back to normal.
What do you currently value the different airline miles and hotel points?
Before we hold eulogies for the airlines they will survive in what form no one knows at this point in time. Business travel it will come back but no where near what it once was the hotels and airlines know that. Hotels I predict you will see some properties "repurposed" door counts will drop same for airline seats. The once feared "pilot shortage" is gone. Long haul "apartments" spas', showers etc, gone by the wayside...
Before we hold eulogies for the airlines they will survive in what form no one knows at this point in time. Business travel it will come back but no where near what it once was the hotels and airlines know that. Hotels I predict you will see some properties "repurposed" door counts will drop same for airline seats. The once feared "pilot shortage" is gone. Long haul "apartments" spas', showers etc, gone by the wayside as was the "Flying pubs/piano bars" of days gone by. Cruise lines like airlines are snapping marginal old metal for newer more efficient ships. Africa now there is a story waiting to happen, between geopolitical issues migration and droughts who knows only thing we do know is the wildlife will suffer.
@Hal This may or may not matter to you since you have millions to put into a Bask Bank account, but the 1099 will be based on 0.42 cents/mile, not 0.30 cents/mile. Also, FDIC on accounts is only up to $250K.
PS, sorry to disappoint: UA is not dead nor will it be. Like the others, they are surviving this nightmare, and with the latest round of numbers, UA has the smallest loss of the big three (1.5B vs DL's 5.5B), the most cash on hand, 15.5B, and the smallest number of furloughs.
GO UA!
“It will take years for business travel to recover, so premium cabin award seats should be more readily available,”
This could be a faulty assumption given that capacity may be greatly reduced until there is a full recovery which includes business travel. I hope you’re correct but I’m not currently optimistic given what I’m seeing opening up for travel next summer and fall on the international front. Less flights to international destinations is clearly...
“It will take years for business travel to recover, so premium cabin award seats should be more readily available,”
This could be a faulty assumption given that capacity may be greatly reduced until there is a full recovery which includes business travel. I hope you’re correct but I’m not currently optimistic given what I’m seeing opening up for travel next summer and fall on the international front. Less flights to international destinations is clearly evident. The good news is the fares for premium cabins are attractive, the award space not yet apparent at least in my searches.
We are always going to travel and it's best to do it right! It's only a question of how long the current situation lasts and it will end.
If you are concerned about collecting miles in a particular airline keep your currency in Membership Rewards, Thank you points, etc. and convert them as needed.
I don't want to chase miles & points anymore, but I have no choice. Since savings accounts are paying so low, I put a few million in cash in a Bask Bank account instead to earn AA miles. So I'll have a crap ton of AA miles soon which I'm not sure I'll be able to use, but I guess we'll be using them for anytime J/F awards. But even at 1c a mile, I'm still doing better since your 1099 is based off 0.3c a mile.
@PK - I think you're missing the point. What difference does it make if Delta gives away Diamond and Southwest gives away Companion in 2021. Biz travel is going to be back until q2 at the earliest, and that's being aggressively optimistic. So under these circumstances, the people getting this status will get a very marginal return on that status before going back to low or no status whatsoever.
Yes. Especially with cash back option you know minimally what your points are worth. Having schwab Amex platinum assured me that I’m minimally getting 5% back when I use my Gold card for groceries and restaurants.
With +3 for referrals I can minimally get 3.1% cash back for paying my taxes.( more if I find a better point redemption ).
If smart using all the deals and one time specials you can be getting a lot more value now than ever before.
Some of the examples you provide as deals ARE devaluations. Delta giving out diamond to a bunch of PPROs who don’t fly? Have fun getting upgraded. The southwest companion pass being able to be earned with just 1 booking? What’s the incentive for flying WN knowing they could just give away the golden egg? Not to mention UA just devalued partner awards yesterday and Hyatt is set to introduce peak/off peak just around the corner....
Some of the examples you provide as deals ARE devaluations. Delta giving out diamond to a bunch of PPROs who don’t fly? Have fun getting upgraded. The southwest companion pass being able to be earned with just 1 booking? What’s the incentive for flying WN knowing they could just give away the golden egg? Not to mention UA just devalued partner awards yesterday and Hyatt is set to introduce peak/off peak just around the corner. airlines have literally bragged to creditors about their ability to devalue the currency and turn off availability to increase cash bookings. Are J seats going to be empty because the lack of biz travel? Yeah but you won’t be able to book them with points because the airlines need cash to pay their massive new debts, not fake cash. Case in point try and find SWU space for Europe summer 2021 right now - you can’t. Airlines will cut fares and close award inventory. 2021 and 2022 will be the ultimate free agent/cash J years.
In fairness I have only said Delta and United are dead. Dynamic awards are the end of this industry... hopefully American doesn’t follow suit.
There is a good workaround for now: credit UA to another star carrier. Credit delta to Virgin Atlantic.
Life is long. The virus impacts us all but does not define us. Ben, the more you write about travel the more you educate and help provide escapism. Don’t even think of stopping.
One thing that has stood out is that revenues from credit cards has been extremely important for airline and hotel companies during the pandemic, and banks have remarked that travel credit card customers have been among the most engaged. So I think these companies have a vested interest in keeping these customers. In addition, leisure travel has held up better than corporate travel.
Also for those that want to preserve flexibility, just focus on the...
One thing that has stood out is that revenues from credit cards has been extremely important for airline and hotel companies during the pandemic, and banks have remarked that travel credit card customers have been among the most engaged. So I think these companies have a vested interest in keeping these customers. In addition, leisure travel has held up better than corporate travel.
Also for those that want to preserve flexibility, just focus on the Chase ecosystem (where points can be cash out directly at 1 cent per point or via PYB) or Amex (where a Schwab Platinum can cash your points out at 1.25 cents per point).